United States / Investment Banks
Top 5 Fastest Growing, Most Overlooked Industries
by Kiera Outlaw
Jul 25 2019

Investment bankers must have their finger on the pulse of how industries are performing, to help companies and government entities obtain capital financing. From the fastest to the slowest growing industries, and the tech heavy to the heavily regulated industries, investment bankers must stay armed with the latest information to offer their clients enough options to meet their financial goals.

IBISWorld compiled the fastest growing (by revenue) industries in the US over 2018-19. In addition to double-digit revenue growth, these industries are also in the growth phase of their industry life cycle, and have low market share concentration and a high level of technology.

 

1.    Autonomous Underwater Vehicle Manufacturing

This industry manufactures autonomous underwater vehicles (AUVs), which travel underwater without an operator and have their own power source.

Why It’s Attractive

The AUV industry is relatively young and demand for its services is on the rise. AUV technology is quite novel and most industry defense programs are still in a research and development (R&D) process with minimal procurement. Funding is necessary for industry projects, even though it can drastically rise and fall depending on the outcome of the R&D work.

Another catalyst for exceptional growth in the AUV industry is the oil and gas sector. Oil and gas companies are increasingly adopting AUV systems because AUVs have a higher resolution capability, particularly in deep water. 

 

2.    Medical & Recreational Marijuana Stores

This industry includes stores that retail marijuana for medical and recreational purposes.

Why It’s Attractive

Revenue for the Medical and Recreational Marijuana Stores industry has grown exponentially, bolstered by increasing consumer acceptance and sweeping legalization victories across the United States. Greater acceptance of the industry’s products and strong demand growth have caused more companies to enter the industry, piquing the interest of investors.

The real boom in the industry has been an unprecedented growth in the recreational marijuana segment. The licensing of commercial recreational marijuana retailers contributed to industry revenue growth of 23.7% in 2016 as new entrants continue to flood the recently legalized market. Companies in this segment should be considering their acquisition opportunities to strengthen their share of the rapidly growing market.  

 

3.    Video Games

This industry develops and manufactures games, game consoles, games made for personal computers and related accessories.

Why It’s Attractive

Subscription-based software as a service (SaaS) has led to many successful game franchises, such as Epic Games’ Fortnite. Fortnite’s multiplayer Battle Royale game has over 250 million players across every major gaming platform, including phones. The popularity of SaaS continues to develop in the zeitgeist, prompting other developer companies to capitalize on growing demand from this segment.

 

4.    Social Network Game Development

This industry, a subset of the Video Games industry, develop video games played on a social network platform such as Facebook and other smartphone applications.

Why It’s Attractive

The introduction of social gaming has made it easier for more people to play interactive games. Established video game developers have missed the opportunity to engage new markets and, as a result, M&A activity has increased, allowing traditional video game developers to capitalize on this trend. An example of the current opportunity in the industry is Activision Blizzard’s acquisition of King Digital Entertainment for $5.9 billion in 2016. 

 

5.    Field Service Management Software

This industry develops and publishes software designed to assist in tracking and dispatching field service technicians, and disseminating appropriate data to those technicians.

Why It’s Attractive

As businesses increase their technological capabilities, field service management software providers rush to provide their growing prospective customer base with FSM software, which can improve businesses’ operating efficiencies. Part of this rush pertains to R&D. Generally, software companies devote a significant amount of resources to R&D to develop new products for areas previously underserved by software. Product development and launches use significant portions of company funds, therefore making this industry attractive for investors.

 

The best way to keep up-to-date on the latest in industry trends, challenges and opportunities is to access a credible, comprehensive market intelligence solution. More importantly, that solution should also provide the breadth of coverage needed to access information on industries across all sectors.

For more information on market intelligence visit www.ibisworld.com today.